Donald Trump’s moves turning deadly for Narendra Modi? Iran nuclear deal walkout spells trouble for India

By: | Published: May 10, 2018 1:22 PM

US President Donald Trump on Wednesday walked out on the nuclear deal signed with Iran unleashing uncertainty in an already tight international oil market. How this decision is going to spell trouble for India, find out!

Donald Trump’s moves turning deadly for Narendra Modi? Iran nuclear deal walkout spells trouble for IndiaThe country and the Modi government have benefited from lower oil prices over the last few years. (Image: PTI)

US President Donald Trump on Wednesday walked out on the nuclear deal signed with Iran unleashing uncertainty in an already tight international oil market. As India is the net importer of oil, with Iran being the third biggest supplier, the decision to abandon the Iran nuclear deal by the United States will spell trouble for Narendra Modi on multiple levels, a report has said.

“The country and the Modi government have benefited from lower oil prices over the last few years… This gave India’s economic policymakers more fiscal space and Modi more political space—both of which will be hurt by much higher prices,” a Brookings report said. Experts see oil prices surging between $5-$10 a barrel if the sanction is re-imposed on Iran.

“Delhi will want to find a way to maintain as much of this supply as it can—including by seeking exemptions if possible,” the report said. Besides oil price, the concern is also geopolitical. Over the past few years, Narendra Modi has tried to build a diplomatic relation with the Middle East, which could be in jeopardy after the development.

“Delhi will also be concerned about the impact on its regional connectivity plans that have been driven by both geopolitical and geoeconomic interests. In the absence of a corridor through Pakistan, India has seen Iran as a potentially crucial transit route to Afghanistan and Central Asia,” the Brookings report said.

The Narendra Modi development did not react aggressively to the walkout but asked for a “peaceful resolution through dialogue and diplomacy by respecting Iran’s right to peaceful uses of nuclear energy”. A DBS report said that India may resort to looking for waivers from the US or going back to using a mix of barter and gold to settle payments. Donald Trump’s other moves such as waging trade war against China and tightening H1B Visa policies have also got analysts worried about its implications for India.

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